Abstract:

Digital technologies are changing the landscape of industrial manufacturing. These changes are not only technical, but socio-technical (Geels, 2004). Digitalization changes how “industrial work is done, but also who (or what) does the work, how the work is organized, and how it affects the broader economy and the society.” (Michelsen et al., 2022).

This paper addresses where and how life science manufacturing, and in particular pharmaceutical manufacturing, may be organized in the future. Ongoing and potential future shifts to the location and the organization of pharmaceutical manufacturing are influenced and shaped, at least in part, by digital and technological advancements. The shifts affect, cf. Michelsen et al., where work is done and by whom (or what) and also the work conditions and relations of pharmaceutical manufacturing’s blue-collar workers.

Pharmaceutical manufacturing is seen as an interesting case for several reasons. Firstly, the sector has a strong societal impact that goes beyond its large economic footprint. Secondly, the organization and location of the sector’s production facilities has attracted much political attention in recent years, particularly spurred by the COVID-19 pandemic and subsequent supply chain challenges. This has led to calls for a restructuring of incentives enabling radically alternative production landscapes compared to today. Thirdly, manufacturing happens in highly regulated environments in which there is, comparatively, little room for rapid, agile, and flexible shifts to production lines and production processes. This suggests that pharmaceutical manufacturing as a least likely case for major second-order impacts of digital transformations on the organization of work, and that findings indicating such shifts even here will highlight broader themes.

The paper provides a literature review of existing literature on location choices of pharmaceutical manufacturing. For the forward-looking analysis, the primary data source is a series of 19 semi-structured focus group interviews conducted October-December 2024 with more than 50 participants representing various parts of the Finnish life science manufacturing ecosystem, including company representatives, academics, and public authorities. Based on extensive coding and a qualitative content analysis of the interview material, supplemented by existing literature and empirical signals and trends detected from grey literature and industry reports, we extract a range of possible direction of movements driving future investments and factory location choices. In short, when it comes to factory localization, the “goal of the location choice is to balance the trade-offs, incentives and constraints between various geographical alternatives” (Tsai & Urmetzer, 2024; Cohen et al., 2018).

Our material thus provides insights into how this balance is and may be changing, leading to a changing future factory location and manufacturing landscape. These include movements towards low-cost labor, towards the availability of raw materials, towards frontier technology hubs, towards hubs of highly-skilled labor, towards a value-chain realignment based on geopolitics and friendshoring, and movements of production closer towards the end-customer. Some of these factors are complimentary, while others appear contradictory and therefore requires the noted balance of trade-offs. While certain of the factors are particular to or has particular meaning for advanced pharmaceutical manufacturing, we believe they hold exemplary value applicable to most advanced manufacturing fields.

The core of the paper is an analysis, based on the proposed directions of shifts, of possible future states of pharmaceutical manufacturing, how each of these states are impacted by and itself impacts digitalization, and how the role and function or blue-collar workers differs across the various future states. This analysis is again informed by the qualitative content analyses supplementing existing literature.

We propose as a general trend, across possible future states, that future factories are likely to function increasingly networked which entails significant shifts for blue-collar workers in pharmaceutical manufacturing for whom the idea of a geography-less matrix organization has yet to take root in the same manner as it already has for white-collar workers even within the same organizations. Overall, our paper help illuminate possible future states of blue-collar work more generally.

References:

Geels, F.W. (2004). From sectoral systems of innovation to socio-technical systems: Insights about dynamics and change from sociology and institutional theory. Research Policy, 33(6-7): 897-920.

Michelsen, K.E., Collan, M., Savolainen, J. & Ritala, P. (2022). Changing Manufacturing Landscape: From a Factory to a Network. In Hussain, C. M. & Di Sia, P. (eds.) Handbook of Smart Materials, Technologies, and Devices. Cham: Springer.

Tsai, T.-Y. & Urmetzer, F. (2024). A decisional framework for manufacturing relocation: Consolidating and expanding the reshoring debate. International Journal of Management Reviews, 26(2), 254-284.

Cohen, M.A., Cui, S., Ernst, R., Huchzermeier, A., Kouvelis, P., Lee, H.L, Matsuo, H., Steuber, M. & Tsay, A.A (2018). Benchmarking global production sourcing decisions: Where and why firms offshore and reshore. Manufacturing & Service Operations Management, 20(3), 389-402.